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Lawrence Graham’s (LG) annual property bill is costing the firm £5.1m a year, according to the firm’s latest LLP accounts.
The accounts confirm that turnover for 2011/12 fell from £58m to £56m and operating profit before any payment to partners slumped 31 per cent from £20.7m in 2010/11 to £14.2m in 2011/12.
The firm saw more money going out than it made, with the profit figure dwarfed by the firm’s drawings, as members took out £21m in 2011/12.
The figures suggest a higher repayment rate has kicked in over the past year, with operating leases going up from £2m to £4.2m.
Preliminary figures, reported in The Lawyer UK200, showed a fall in profit for 2011/12, with net profit halving to £8.3m and profit per equity partner dropping 26 per cent from £412,000 to £303,000 compared to the previous financial year (19 October 2012).
The accounts showed that the firm agreed £4.5m in new loans during 2011/12, having repaid £4.1m the previous year. Transactions with partners saw £21.2m paid out – up from £17.7m in 2010/11.
This meant that at the financial year end, total partners’ interests including loans and other debts due was reduced to £19.1m from £27.3m.
At 30 April 2012, partners’ capital in the firm was £11.3m, with LG saying it continues to use what it believes is an “appropriate mix of both debt and partners’ funds” to provide working capital for the business.
According to the LLP accounts, LG’s net debt at 30 April 2012 was £7.5m, up from £4.2m the previous year. Total bank loans are now at £9.3m, up from £5.5m.
The drop in turnover and profitability came during a year when average staff numbers remained stable. The firm has 186 lawyers and 136 support staff.
Managing partner Hugh Maule has previously said LG is getting closer to finding a solution for its property costs (25 July 2012).
In the 2011/12 review of the business, the firm highlighted its instruction on the merger between Russell Jones & Walker and Slater & Gordon, and also said its international turnover was experiencing healthy growth.
In 2011/12, 42 per cent of total revenue was from international client work and revenue from the Dubai office grew by 40 per cent.
The real estate practice was up 4 per cent and dispute resolution group was up by 6 per cent year-on-year.
The firm said in the accounts: “The fall in profitability was more principally due to increased property costs in London and occupying more space than we need. To mitigate this steps are being taken to let surplus space.”